VIEW: BNP Paribas: On Hold For Some Time But A Hike Is On The Horizon

BNP Paribas note that “with the U.S. Federal Reserve having turned increasingly hawkish and the Japanese government’s stance on monetary policy shifting, we expect the Bank of Japan to end its negative rate policy and to hike its target for the 10-year JGB yield to 0.25% in Q423. We still think that the BoJ is unlikely to raise rates during the tenure of Governor Kuorda which continues until April ‘23. However, the recent rapid depreciation of the yen means we cannot rule out an earlier rate hike. Like the BoJ, we do not expect current cost-push inflation to lead to a sustained 2% inflation rate. For now, therefore, we expect any rate hike to be a one-off move aimed at addressing the side effects of its accommodative policy.”